Private Water Utility Landholdings: Financial and Political Implications

Abstract

Ecosystem services research has led to policies favoring watershed land protection at the federal, state, local, and private levels, notably at drinking water treatment facilities. A few researchers have connected land use and water utilities by estimating surface water treatment costs through raw water sediment load. However, more comprehensive cost-benefit research of private watershed land ownership is absent. In my research, I develop a distributional cash flow model to estimate the magnitude and timing of costs and benefits to a Connecticut private water company, the local community, and to the economy as a whole using Connecticut Public Utilities Regulatory Authority data, interviews, regulatory landscape, tax regime, and non-market valuation benefits transfer. The base case model predicts positive NPV to all parties in Connecticut: $3,828,432,329 to the economy from 2010 through 2025, where $1,461,824,087 of that is from benefits to the company and $2,366,608,242 is from benefits to the community. Sensitivity analysis implies these findings may be robust to systematic changes (+/- 10% and +/-20%) to input parameters. The distribution of costs and benefits lends itself to political economy considerations and future policy reflections.